Revamping Legal and Institutional Framework for the Management of Inflation Targeting in Developing Economies (Published)
This paper examines the legal and institutional framework for the conduct of Inflation Targeting(IT) in developing and emerging economies using Nigeria as a test case. The main argument in favour of the efficiency of IT is that autonomy, transparency, and accountability lead to lower inflation and inflation variability. These are ingrained in the legal and institutional governance on the part of the central bank. The paper, therefore, attempts to find whether sound institutions and quality governance could make a difference in the management of IT that delivers results in developing countries. An exploratory method was employed to examine Nigeria’s legal and institutional framework for monetary policy. Evidence from the cross-country review of the legal framework that embodies provisions for monetary policy in Nigeria suggests that ambiguous legal provisions, low-quality governance, and potential coordination pitfalls threaten the IT frameworks that deliver results. It is recommended that developing and emerging economies like Ghana, Turkey, and South Africa, which are struggling with weak institutions and target overshoot, should embark on institutional revamping to optimise their legal and institutional framework to ensure efficiency in target setting, monitoring and evaluation.
Keywords: Developing Economies, Inflation, Inflation Targeting, Legal Framework, institutional framework
Alternative Securities Market and Long-Term Capital Market Financing in Nigeria (Published)
This study examined the effects of the Alternative Securities Market (ASeM) on long term capital market financing in Nigeria during the period 2013 – 2020. The objectives of the study were to: find out the effects of ASeM equity issues on market capitalization in the Nigerian stock market; to assess the effect of ASeM index on market capitalization; to investigate the effect of interest rate on Market Capilisation; to assess effect of inflation rate on market capitalization; and to ascertain the effect of exchange rate on market capitalization in Nigeria during the period of study. The study adopted ex-post facto research design and made use of secondary data. Time series data for the period 2013 – 2020 from the Central Bank of Nigeria statistical bulletin and well as data from Nigeria stock exchange publications were used. The study employed multiple regression analysis using Econometric-views (E-views) 10.0, to analyse the data. In the analysis, long term capital market financing was proxied by Mcap (market capitalization) and this was the dependent variable. The independent variables of the study included ASeM equity issues, ASeM index, interest rate, inflation rate, and exchange rate. The results showed that ASEM equity issues had a negative but insignificant effect on long term capital market financing (Mcap); ASeM index had a significant positive effect on long term capital market financing (Mcap); interest rate had a negative but insignificant effect on long term capital market financing; inflation rate had negative but significant effect on long term capital market financing; exchange rate had a positive but insignificant effect on long term capital market financing in Nigeria during the period of the study. The study recommended that regulatory authorities (SEC and Nigeria Exchange Group) should encourage greater participation of SMEs in the activities of the alternative securities market through equity share issues to boost or enhance long term capital market financing; regulatory agencies should sustain measures that caused ASeM index to have a significant positive effect on long term capital market financing; monetary authorities (especially, the CBN) should employ policy measures to address the negative effect of interest rate and inflation rate on long term capital market financing in Nigeria among others.
Keywords: Exchange Rate, Index, Inflation, Interest Rate, Market Capitalization, equity issues
The Impact of Money Supply on Inflation in Nigeria (1980 – 2009) (Published)
This study examined the impact of money supply on inflation in Nigeria between 1980 and 2009, using Vector Error Correction Mode (VECM). The data for the variables were sourced from CBN statistical Bulletin. The results of the test established a significant long run positive relationship between money supply and inflation in Nigeria. Based on this finding, the study recommended that, government intensify the effort to combat inflation by encouraging the monetary authority to put in place policies measures that are gear toward reducing the volume of money in circulation in Nigeria.
Keywords: Inflation, Money Supply, Nigeria, VECM
Inflation and Growth Nexus in Nigeria: An Investigation into the Simultaneous Relationship (Published)
The relationship between inflation and economic growth remains an unresolved debate in empirical research. Its relevance in understanding growth behavior however remains pertinent. It is in this light that this study seeks to understand inflation and growth nexus in Nigeria. The study employs a two stage least square estimation to examine a simultaneous equation model with data from the Central Bank of Nigeria Statistical Bulletin and World Bank Indicators. The study shows that inflation is beneficial to growth though not significantly while growth is significantly beneficial to inflation; given the positive relationship between inflation and growth and the negative relationship between growth and inflation. The results further show that Money supply and trade openness are significant determinants of real GDP for all three estimation techniques under consideration. While, real GDP, money supply and interest rate are significant determinants of inflation. The study therefore recommends that inflation be controlled to have its optimal effect on output while production be diversified to optimize its effect on inflation.
Keywords: Inflation, Nigeria, Simultaneous Relationship, economic growth